In this new era of capitalism, who do we trust? Markets, regulators or both?

April 22, 2011

At this very early stage in the 2012 presidential campaign, the economy is getting most of the attention. From the deficit to taxes, changing Medicare and Social Security, to raising the debt ceiling — it’s all about the Benjamins and whether the government should play a larger or smaller role in managing the economy.
We want to introduce you to someone who says it’s not one or the other — it’s both. Anatole Kaletsky is an economist and editor-at-large of the Times of London. His most recent book envisions a future where markets and government will have to work together in a way we haven’t seen before. He calls it “Capitalism 4.0.” Need to Know spoke with Kaletsky about his theory — but first, here’s a little historical perspective:

According to Kaletsky, Capitalism 1.0. was marked by Adam Smith’s “Invisible Hand” theory, which said that markets function best when they’re left alone. This period ended with the Great Depression. Capitalism 2.0 began in the 1930s with the New Deal, a time when people trusted government, not markets, to lead economic recovery. But this trust in government dissolved with the inflation of the 1970s. Capitalism 3.0 began in the 1980s. We know it as Reaganomics, the period when the market once again ruled. That ended with the financial crisis of 2008.

And that brings us to today, and Capitalism 4.0. Need to Know financial correspondent Stacey Tisdale sat down with Kaletsky to discuss who we should trust now.

Rick Karr recently visited Seattle to look at a program designed to give the unemployed the skills they need to find jobs in one of the country’s fastest-growing industries.

Comments

Anonymous

Capitalism 4.0 or 5.0?

How about Somethingelse 1.0?

Capitalism is consuming the planet while making a few, mostly undeserving folks fantastically rich. Most of the rest of us are economically (and environmentally) insecure at best, and billions are desperately poor.

Notomjack

When it comes to answering the question “who do we trust now?”, Kaletsky seems to tell us that it’s going to be a new faith in corporations.

kralph

Mr. Kaletsky refers to other countries post office, i.e. Germany’s, as if what they do is comparable to the U.S. postal service. It is in name only, they are a logistics and banking business. USPS is not, besides the size of the area of Germany is no larger than California, and when you include other Euro countries do you even come within 2/3 of the US, not counting the 49th and 50th state.
My point is that the privatization of other countries post offices is NOT what the US wants nor needs and the 4th generation of capitalism should not be the withdrawal of government to private industry, such as the case occurring in education. The post office is a “service” and NOT a business provided by the federal government.

jan

The polite response is I disagree strongly with Mr. Kaletsky. The not as polite but more honest response is that Mr. Kaletsky is full of baloney. He’s created a world where government doesn’t govern. Government’s only role is to acquiesce to and enforce corporate rule. His idea of checks and balances is nothing more than an illusion inside his head.

Roger

Refreshing, honest, articulate description of the situation we face in this country and throughout the world. Thank you for presenting a topic that has been marketed in the past by special corporate interest groups. I can count on PBS to communicate the truth. It is nice to hear and read about a subject that has been smeared with exagerations and distortions all in the name of protecting a system that has destroyed the lives of hard working families.

Meadow J

Kaletsky is simply another promoter of a system that socializes losses and privatizes gains.

Anonymous

No doubt – as soon as I hear any remarks about privatizing the post office – I know I am talking to a total moron. I know the person I am talking to has zero understanding of the premise and history of the post office. It’s a quick indicator of utterly shallow thought and/or selfishness.

Could you just imagine how much UPS or Fed-Ex would have to charge to guarantee timely delivery to any American address for the same amount, regardless of address? I know Fed-Ex can’t even handle its current workload with any sort of reliability. Yes, it is true – I live in a community 60 miles north of Columbus OH. and 40 Miles southeast of Toledo. The idea that Fed-Ex is reliable is a massive myth. Especially on ‘Overnight’ deliveries. There’s 18,000 folks and two growing universities here, too. They recently spent a week getting a package from Kentucky to me… no kidding! Less than 300 miles… 5 of seven overnight deliveries in the last 10 years – didn’t make it overnight. Never mind, that in every instance – the package was actually on the floor of the closest terminal at the time of area delivery dispatch. I am not kidding you.

One time – after I drove 70 miles to meet a client delivery, they claimed the snow kept them from making it. It didn’t keep me from going 70 miles…

If I want to cast doubt on my company’s reputation, I merely have to promise something that I know will have to be overnight from Fed-Ex.

ANYHOW – it is grotesquely ignorant to force higher costs onto those who’s operations by necessity make their locations remote (hard to plant 5000 acres in Manhattan) yet who’s production is vital to national interests. It is by tradition and declaration, time and again – that we have recognized the relative equality of postal service as essential to the growth of the country. We long ago decided it was dumb to hinder developments in outlying areas…

In the event of a major EMI attack that disables much of the electronic infrastructure – then what? I think I’d want to know the truly experienced organization is running the show.

Guest 5

Any system untrammelled by some kind of “REASONABLE ” control will eventually lead to an excess market speculation ( very damaging) or much higher cost or inefficiency by say government.
The way to do it is so called checks and balances with in certain cases legislative restrictions .
For me the classic example is the structure of banks as they were in 2008.
when you have a single group entity bank who can be:-
a retail banker ( consumer credit)/mortgage lender,
an investment bank and merger acquisition advisor,
with a hedge fund subsidiary,
and be a dealer in Treasuries and government bonds under the same group management you have no
checks and balances, and so called safety ratios or capital ratios become imposible to effectively
calculate.
They have to separate legal libility individual entities, and Bonuses payable on the profit of the entities separately, not individaual dealer or trader bases.
Then we need some good old fashioned FX dealing rules that say there must be a current need based on a specific commercial transaction or commodity buy or sell payable in full. No margin trading.
Same on the stock exchange or bond market, you wantt to Buy put up the whole cash, you want to sell you get the money within 24hours.
You wanna play agame of short sell or buy long or whatever you deposit 120 %
i.e eliminate margin trading because for every winner there is a loser
Commodities if you are not a registered TRADER ( no more dealing or dealers) you cannot buy or sell unless it is in your corporate objectives, to be a trader… dealing not allowed as Uncommercial.
The above mean only real money and real risks are taken Margin trading is fundamentally a non ecomic benefit generator.
Regards,
Guest 5

Need to Know is a production of Creative News Group (CNG) in association with WNET. Marc Rosenwasser is Executive Producer. Need to Know is made possible by Bernard and Irene Schwartz, Mutual of America, Citi Foundation, John D. and Catherine T. MacArthur Foundation, Miriam and Ira D. Wallach Foundation, Margaret A. Cargill Foundation, The Corporation for Public Broadcasting and PBS.